Session 2 Flashcards
Law of Contracts
1
Q
Law of Contracts
A
Regulates how contracts are created and enforced.
2
Q
True or false: The legal system will help enforce your contract.
A
True
3
Q
A Contract
A
A legally enforcable promise between two or more parties.
4
Q
True or false: contract law is a relatively new area of the law.
A
False: Contract law is a very old and comprehensive area of law.
5
Q
Does contract law derive from common law or equity?
A
Contract law derives from both common law and equitable sources.
6
Q
Pacta sunt servada (in contract law)
A
Promises ought to be performed.
7
Q
True or false: If you have a contract that is without error, it must be followed.
A
True
8
Q
True or false: Contracts are involuntary in nature.
A
False: Contracts are voluntary in nature.
9
Q
What is the goal of contract law in the case of a breach?
A
To put the party in the position they would be in if the contract had been performed in a breach of contract.
10
Q
True or false: Contracts looks to the future.
A
True
11
Q
True or false: Torts look to the future.
A
False: Torts look to the past.
12
Q
What are the elements of a valid contract?
A
- Intention of the parties to create a legally binding contract
- Offer
- Acceptance
- Consideration
- Legal capacity
- Legality
- (Sometimes) Form Requirements
13
Q
Even if all the elements of a valid contract are present, why might the contract still not be enforceable?
A
If there was a mistake, misrepresentation, undue influence, and/or duress.
14
Q
Intention to be Bound
A
If someone doesn’t want a contract there is no contract.
15
Q
Offer
A
An offer must be made and accepted (an offer must be accepted, not the first offer).
16
Q
True or false: If a new offer is made, the old offer is dismissed (no longer exists).
A
True
17
Q
Consideration
A
Something of value must be exchanged.
18
Q
Legality
A
Cannot be in a contract to do something illegal.
19
Q
True of false: In business not all contracts must be in writing.
A
True - But it is advisable to put it in writing.
20
Q
True or false: Providing comfort by a parent company for a loan is a contract.
A
False: Providing comfort by a parent company for a loan is not a contract, it is just comforting the bank that the child company will pay, the parent company is not having to pay.
21
Q
What is the practical relevance in letter of comfort (LOC) situations where:
A
- A large commercial loan is negotiated between a bank and a corporation which is a subsidiary of another large corporation.
- Lender and parent company agree on a LOC.
- Parent provides various assurance in LOC regarding the state of affairs of the subsidiary.
- Thus, bringning costs of borrowing for subsidiary down.
- Enforceability of LOC is questionable and subject to contreversy.
22
Q
True or false: Nothing politicians say have no legal force whatsoever.
A
True
23
Q
Exampes of no intention to be bound
A
Election promises by politicians, social settings, and sharing of seasonal sports tickets.
24
Q
List some situations where dealings between family members do create legal obligations.
A
- Commercial transactions between family members
- Non-commercial transactions between family members
- Marriage contracts regulating
- Co-habitation agreements regulating
25
Offer
A communication of the offeror to the offeree to enter into an agreement on certain terms.
26
True or false: Quotations of prices are offers.
False: Mere quotations of prices are not offers.
27
True are false: Offers are to be distintinguished from invitations to start negotiations.
True
28
Communication of offers
Offer requires communication to offree to be effective.
29
True or false: Decision to make an offer does not constitute an offer does not constitute an offer even if the offree becomes aware of it.
True: an offer is not valid until received by offree.
30
Offer in Retail
The display of an offer does not constitute an offer, nor does placing the items in a basket by the customer.
The presentation of items by the customer to cashier amounts to an offer.
31
Offer in Auctions
Individual bids are offers that may or may not be accepted by auctioneer, the seller is not bound until the fall of the hammer.
32
What 3 parties are involved in an auction?
1. Owner
2. Auctioneer
3. Highest bidder
33
True or false: Acceptance of an offer must mirror the offer, otherwise there is no contract.
True
34
True or false: Offer acceptance can be explicit or inferred from the party's conduct and must be unconditional.
True
35
How must an offer be accepted?
Acceptance must comply with instructions of the offer for the manner, place, mode of communication and timing of acceptance.
36
True or false: Silence can be acceptance if properly stipulated in offer contract.
True
In all other circumstances silence is not acceptance.
37
What happens if a party accepts the offer after the deadline (late acceptance)?
Late acceptance is ineffected if offer specifies date/time which it can be accepted.
So, the offree does not have to allow the acceptance of the offer after the time outlined.
38
How does a party "kill" the orginal offer?
By posing a couter offer
39
What is the issue of the "Battle of Forms"?
Two businesses are negotiating the terms of a contract and each party wants to contract on the basis of its own terms.
40
What is the common result of the "Battle of forms"?
The "last shot" rule.
41
The "Last Shot" Rule
The party who sends the last documaent before performance prevails.
42
Communication of Acceptance
Acceptance must be communicated unless offeror waives the requirement.
43
Postal Acceptance Rule
Communication of acceptance by mail is deemed to have occurred by posting (not by the offeror receiving the acceptance).
44
Can an offer be revoked?
An offer can be revoked as long as it is not accepted.
45
True or false: Revocation of an offer does not require communication by offeror to offeree.
False: Revocation of an offer requires communication by offeror to offeree.
46
When is an email offer accepted?
Once the acceptance is in the offeree's inbox.
47
Option Agreement
An agreement where an offer will stay open for an extended amount of time in exchange for something, usually money.
48
Why do businesses use option agreements?
- To determine if they can line up related contracts
- To gain time for market research
- To determine whether the proposed transaction makes sense from a business perspective
49
What does the doctrine of consideration require?
The doctrine of consideration requires for a contract to be enforceable that the promise must be given for something of value in return.
49
Exceptions to the doctrine of consideration
- Contracts under seal
- Promised donations to charity which the charity relied on
50
True or false: Past consideration is not consideration.
True: If a party to a contract is already entitled to something, it cannot be consideration. --> You cannot be given something you already have as consideration.
51
True or false: You can offer consideration even if there is a prexisting public duty.
False: You cannot offer consideration if there is a prexisting public duty.
52
Promissory Estoppel
A doctrine preventing a person to evade a promise when someone esle has relied or acted upon it.
53
What kind of concept is promissory estoppel?
An equitable concept (equity law)
54
A Minor
Someone under the age of the age of majority.
- 18 in SK
- 21 in common law
55
Why is the legal capcity of minors protected?
Due to lack of maturity and inability to understand the consequences of their actions and have a lack of experience.
56
True or false: A minor can: buy food and clothes, get a summer job, and buy a luxury car.
False: Minors cannot buy a luxury car, as this is not something necessary that clearly benefits them.
57
True or false: Parties who are legally impaired are treated similarly to minors from a legal perspective.
True
58
By what can significant impairment be caused?
Alcohol, drugs or cannibis.
59
If someone has entered into a contract while impaired, what should they do?
If someone is impaired so they don't know what they're doing, they can void that contract once they have returened to full mental capacity.
This must be done immediately, you cannot wait.
60
True or false: Usually in business transactions people will be adults and sober.
True
61
True or false: Impaired persons will be held liable for contracts for neccessities entered into by them.
True (For example: life saving surgery)
62
Incorporation
Brings into existence a new legal person whose rights and obligations are the same, in many ways, to those of a natural person.
63
What does a corporation not have legal capacity to do, that a person does?
- Marry
- Adopt a child
- Leave a will
64
Who is liable in a corporation?
The corporation itself, not the shareholders behind it.
65
Piercing the Corporate Veil
Courts may disregard the seperate legal existence of a corporation (and make shareholders liable).
66
When do courts pierce the corporate veil?
- If it is unfair
- If incorporation is for an objectionable purpose
- If the corporation is merely acting as an agent for someone else
- And other factors
67
True or false: It is common for courts to pierce the corporate veil.
False: Courts are reluctant to pierce the veil.
68
True or false: Unions have legal existence separate from their members.
True
69
True or false: Unions can sue and be sued in common law court in matters not related directly to collective agreements or employment related status.
True
70
True or false: Trade unions as an organization may not enter into an agreement (contract).
False: Trade unions as an organization can enter into an agreement.
CBAs are always allowed for trade unions.
71
CBA
Collective Bargaining Agreement
72
True or false: you may enter into a contract to do something illegal.
False: if you are in a contract to do something illegal, this is illegal and the courts will not maintain it as a contract.
73
True or false: Prostitution is against public policy.
True
74
Are arranged marriages legal in Canada?
No, in Canada arranged marriages are deemed immoral and therefore are illegal.
75
List types of agreements contrary to public policy at common law.
- Agreements to commit an unlawful act
- Agreements facilitating immoral conduct
- Agreements undermining the administration of justice
- Covenants in restraint of the trade
76
Severance
Disregarding the illegal clause and keeping the remainder of the contract in place.
77
The Ticket Issue
Not reading theterms and conditions when buying something like a bus ticket.
78
Form Requirements
Legal stipulations that specify how a contract must be documented to be valid and enforceable.
79
True or false: The vast majority of contracts today do not require a written form to be enforceable.
True
80
The Parole Evidence Rule
A party is prevented from adding new evidence that would change, amend, or contradict the clear terms of agreement.
81
In which situations is the parole evidence rule used?
The parole evidence rule plays a role when only one party to a contract claims that contract does not reflect the entire agreement but that prior, typically verbal, undertakings form part of the contract.
82
Traditional approach to the parole evidence rule
In a written agrement which on its face value appears to be a complete agreement, the rule prevents evidence to be addmitted which varies, adds or subtracts from the terms.
83
Mondern approach to the parole evidence rule
In a written agreement which on its face appears to be a complete agreement, a party could lead evidence suggesting the written terms are only one component of an overall agreement that is partly written and partly oral.
84
True or false: Canada's courts today use the modern approach to the parole evidence rule.
False: Canada's courts can't quite decide whether they will use the traditional or modern approach.
85
Which version of the parole evidence rule does the Supreme Court tend to prefer?
The traditional rule
86
Entire Agreement Clause
Says there are no other enforceable agreements apart from what is written in the document containing the clause.
(there are specific exceptions to this, as otherwise it is quite strict).
87
True or false: Major misrepresentation of meaning of contract will void the contract.
True
88
Privity of Contract
Only a person party to a contract is bound by it.
89
List examples of exclusions to privity of contract.
- Prior interest in land
- Trusts
- Agency relationships
- Tort law
- Assignment
- Life insurance
- Statutory exceptions
90
True or false: A contract can bind parties who have not made and agreed to the contract.
False: A contract can only bind those who have made and agreed to the contract.
